Windstream mixed on ratings downgrade; Community Health mixed on final exchange results

By James McCandless

San Antonio, June 20 – Activity in the distressed debt market rose on Wednesday, traders reported, though it was limited to market favorites.

Windstream Holdings, Inc. notes were mixed for a third day as a subsidiary received another ratings downgrade.

Community Health System, Inc. issues were mixed after it announced the final results of the exchange offers for three series of notes by a subsidiary.

PetSmart, Inc. paper gained. The company is currently in a dispute with creditors over a recent equity transfer.

Intelsat SA notes improved. Last week, the company announced that it would buy back its 7¾% notes due 2021. Frontier Communications Corp. issues rose. A recent failed auction did not produce a satisfactory bid for its Florida assets. American Tire Distributors paper fell.

Windstream mixed

Little Rock, Ark.-based network communications solutions name Windstream’s notes were mixed for a third straight day, traders confirmed, after Standard & Poor’s downgraded subsidiary Windstream Services LLC’s corporate family rating and probability of default rating (see related story elsewhere in this issue).

On Monday, the company announced an offering of new second-lien notes in exchange for multiple series of its existing senior notes. The exchanges are being carried out by Windstream Services and Windstream Finance Corp, another subsidiary.

The 7¾% notes due 2021 were level at about 81¼ bid. The 7¾% notes due 2020 shaved off about ¼ point to close at around 92 bid.

On Tuesday, the 7¾% notes due 2021 lost about 2¼ points, and the 7¾% notes due 2020 rose about ¼ point.

Community Health also mixed

Franklin, Tenn.-based hospital operator Community Health Systems issues were mixed, market sources confirmed, after it announced the final results of the exchange offers for three series of notes by its subsidiary CHS/Community Health Systems, Inc. The exchange ended at 12 a.m. ET on June 20. The company said the offering was oversubscribed (see related story elsewhere in this issue).

The company had repeatedly extended the offering’s deadline as it tried to reach the 90% threshold needed for one series of notes.

The 7 1/8% notes due 2020 gained about ¾ point to close at around 86 bid. The 6 7/8% notes due 2022 lost about 1 point to close at 54½ bid.

PetSmart gains

Phoenix-based pet supplies retailer PetSmart paper gained, traders confirmed. The company and its creditors have been at odds with each other since the company transferred 36.5% of its stake in e-commerce segment Chewy.com to private hands, making less available to bondholders. Creditor groups have begun hiring advisors to explore all options to protect its remaining collateral.

“These notes were up on a short squeeze, most likely,” traders said. “They’re getting a lot of attention right now but the rise should end soon. This whole process is far from over, and it might leave holders of the unsecured debt holding the bag.”

The 5 7/8% paper due 2025 traded up about 1½ points to close at around 76 bid. The 8 7/8% paper due 2025 rose about 1½ point to close at 62¾ bid.

On Tuesday, 5 7/8% paper was level and the 8 7/8% paper gained ¼ point.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes gained. Last week, the company announced a buyback program for the Intelsat (Luxembourg) SA 7¾% senior notes due 2021.

The 7¾% notes due 2021 rose about ¼ point to close at 92¾ bid. The 8 1/8% notes due 2023 jumped up about 3¾ points to close at around 81¾ bid.

Norwalk, Conn.-based wireline name Frontier Communications issues rose. The company’s recent auction for its Florida assets failed to produce a satisfactory bid.

The 7 5/8% notes due 2024 gained about ½ point to close at around 73 bid. The 10½% notes due 2022 jumped about 3¼ points to close at around 95¾ bid. The 11% notes due 2025 edged up about ¼ point to close at around 83¾ bid.

Huntersville, N.C.-based tire distributor American Tire saw its 10¼% paper due 2022 lose ¼ point to close at 56½ bid.

“Today was a little better,” a trader said. “But outside of what we’re familiar with in distressed, there wasn’t much that was making noise. It will stay that way barring a major catalyst.”

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